A slightly interesting thought

[writer99025]

There’s been a systemic change in investing in India. From a people who invested only in fixed deposits in banks, gold and real estate, we are moving towards equity investments - and more specifically - mutual fund investment.

For a long time, our markets were dependent on foreign institutional investors (FIIs)…but now with billions of dollars of inflows every month going into mutual funds from domestic investors - ordinary middle-class folks from our cities, towns and villages, domestic investors are the main movers in the market.

What this does is to make the market more stable. Domestic investors are here for the long-term and they invest through the SIP route. They are not fair weather friends like FIIs. So, while the market may move sideways now and then, we are headed for a secular bull market in India, which will last for the next 20-30 years. [cc: @ghemachandar1 bhai]

[ghemachandar1]

Difficult to say that, @writer99025! 🙂

Domestic investments are growing for sure but at the same time economies across the world are getting more integrated and globalized. FII Investment/disinvestment cycles apart, the real value of the companies themselves are increasingly being determined by global factors. I think it’s Rakesh Jhunjunwala who said “A company cannot outgrow it’s opportunity”, and this opportunity is no more confined to the borders and if the opportunity shrinks the company has to shrink.

That said, more people investing into mutual funds is definitely a good progress and is being acknowledged as such: http://economictimes.indiatimes.com/wealth/invest/how-mutual-funds-have-won-over-risk-averse-indian-household/articleshow/59752496.cms

[eoinfinnegan]

The title is extremely misleading.

[gig_freak]

How are you holding up? Have you visited Twitter in the past 24 hours?

[writer99025]

The title is extremely misleading.

You mean it’s an “extremely” interesting thought?

[writer99025]

How are you holding up? Have you visited Twitter in the past 24 hours?

No comment…

[writer99025]

Difficult to say that, @writer99025! 🙂

Domestic investments are growing for sure but at the same time economies across the world are getting more integrated and globalized. FII Investment/disinvestment cycles apart, the real value of the companies themselves are increasingly being determined by global factors. I think it’s Rakesh Jhunjunwala who said “A company cannot outgrow it’s opportunity”, and this opportunity is no more confined to the borders and if the opportunity shrinks the company has to shrink.

That said, more people investing into mutual funds is definitely a good progress and is being acknowledged as such: http://economictimes.indiatimes.com/wealth/invest/how-mutual-funds-have-won-over-risk-averse-indian-household/articleshow/59752496.cms

True that, but my contention is that the domestic investor has a much bigger role in the market than before and is not as fickle as FIIs. FIIs can take their money anywhere if there was to be a setback, but where will the domestic investor go? So what this does is to lend a measure of stability to the stock market. [That’s the point made by the ET article as well.]

[eoinfinnegan]

You mean it’s an “extremely” interesting thought?

Sure, that’s what I meant…

[ghemachandar1]

True that, but my contention is that the domestic investor has a much bigger role in the market than before and is not as fickle as FIIs. FIIs can take their money anywhere if there was to be a setback, but where will the domestic investor go? So what this does is to lend a measure of stability to the stock market. [That’s the point made by the ET article as well.]

True that, but my contention is that the domestic investor has a much bigger role in the market than before and is not as fickle as FIIs. FIIs can take their money anywhere if there was to be a setback, but where will the domestic investor go? So what this does is to lend a measure of stability to the stock market. [That’s the point made by the ET article as well.]

Yes, increase in domestic investments would definitely stabilize markets. Question is, to what extent? We can only know this when we have appropriate data. My belief is that this wee bit of improvement may not account much in relation to Macro-Global economic factors.

The keyword we are discussing here is Volatality - the degree of fluctuations a stock experiences in a given time frame. Domestic investments might reduce volatility. But to be honest, I really don’t pay attention to it. According to many, on small time-scales stocks behavior is near Random Walk. No matter which approach you take, there is only 50/50 chance of winning/losing.

I’m not a full time investor yet. But when I’m one I would be a value investor. This is Benjamin Graham/Warren buffet school of thinking: Stock fluctuations is irrelevant. When you buy stock you are buying a part of a business…over long term it’s the worth of business that decides worth of your stock.

[writer99025]

True that, but my contention is that the domestic investor has a much bigger role in the market than before and is not as fickle as FIIs. FIIs can take their money anywhere if there was to be a setback, but where will the domestic investor go? So what this does is to lend a measure of stability to the stock market. [That’s the point made by the ET article as well.]

Yes, increase in domestic investments would definitely stabilize markets. Question is, to what extent? We can only know this when we have appropriate data. My belief is that this wee bit of improvement may not account much in relation to Macro-Global economic factors.

The keyword we are discussing here is Volatality - the degree of fluctuations a stock experiences in a given time frame. Domestic investments might reduce volatility. But to be honest, I really don’t pay attention to it. According to many, on small time-scales stocks behavior is near Random Walk. No matter which approach you take, there is only 50/50 chance of winning/losing.

I’m not a full time investor yet. But when I’m one I would be a value investor. This is Benjamin Graham/Warren buffet school of thinking: Stock fluctuations is irrelevant. When you buy stock you are buying a part of a business…over long term it’s the worth of business that decides worth of your stock.

Point taken. I have spent the last 2 days writing on stock market investing, one of the most satisfying orders I have received. Will make use of your points in that. [it’s just amazing how I get to write about things I am interested in greatly and get paid for it - cricket, football, Indian politics, global economics and finance, make money online, freelancing and now stock market investing. Love this job 🙂 ]